WASHINGTON: Global investment-banking revenue — fees paid for advice on mergers and acquisitions, debt and equity underwriting and syndicated loans — stands at $US12.8 billion this year, according to Dealogic. That is down 36 per cent from the first quarter of 2015 and marks the lowest quarterly total since the first quarter of 2009 at the height of the financial crisis.
Markets across the globe tumbled to start the year as investors fled risky assets, such as equity and high-yield bonds. The lack of demand caused the issuance of junk bonds and equity, particularly initial public offerings, to dry up. The value of equity and high-yield bonds coming to market globally this quarter is down 46 per cent and 68 per cent, respectively. Initial public offering volume tumbled 74 per cent worldwide, according to Dealogic. This slump is hitting the top lines of investment banks as the first quarter comes to a close.
Investment banks generated just $US2.3bn in fees from underwriting equity offerings. That is down 55 per cent from the same period last year and accounts for just 18 per cent of overall investment-banking revenue in the quarter, its lowest share in 13 years, according to Dealogic. Revenue from IPOs is off 74 per cent from the first quarter of 2015.
Fees from selling debt this year sit at $US4.1bn, down 32 per cent from the first quarter of last year. The slide was driven by a 70 per cent tumble in revenue from selling junk bonds, according to Dealogic.
Work advising companies on mergers and acquisitions or syndicating loans provided no lift either. Revenue from both was down more than 25 per cent. The one bright spot came from China, where revenue from debt offerings reached $US615 million this quarter, up 79 per cent, according to Dealogic.
